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The payments landscape continues to rapidly evolve, driven by emerging technologies and digital transformation across industries. One of the biggest catchphrases of the last few years is “artificial intelligence,” and many are wondering how AI will impact the payments space in the near and long terms.

It’s already clear that digital commerce has expanded beyond the desktop and even beyond mobile. As the Internet of Things (IoT) continues to expand and consumers become connected at every level -- from devices to clothing and appliances -- the ability to pay anywhere at any time will become more ubiquitous. Artificial intelligence will amplify and accelerate this reality, using the power of machines to streamline payments at every level.

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Conversational Commerce Paving The Way

Consumers have come to expect a frictionless checkout experience that doesn’t sacrifice security, and they expect this experience to be available at their convenience. Since messaging apps have surpassed social networks in popularity, these channels have been targeted by smart retailers as a lucrative payments opportunity.

This conversational commerce opportunity sits at the intersection of commerce and popular messaging apps, providing a streamlined purchase experience where consumers prefer to spend their time. It’s not limited to messaging apps, either. Digital assistants have jumped into the payments parade, allowing users to order items by voice command.

Brands are just beginning to scratch the surface with conversational commerce, and the integration of AI will expand capabilities and increase automation. AI technology is currently used via chatbots to converse with shoppers, providing relevant content and suggestions and collecting valuable information. These smart chatbots elevate customer service and automate things on the back end, expanding retailers’ abilities to sell to anyone, anywhere in an intelligent way.

Boundless Possibilities

On the consumer-facing front, AI has the power to personalize experiences. Customers now have the ability to quickly ask questions, obtain information, narrow searches and complete purchases by interacting with a chatbot programmed to connect in a personal way with consumers. The implications for payments reach even further.

Retail giants use AI to guide logistics, fulfillment and fraud prevention. And many organizations see an even broader horizon of potential, including anti-money laundering, customer retention, product innovation, reconciliation and authorization.

Another consideration is real-time payments (RTP). The U.S. is just beginning to dip its toes in RTP, though sustaining this system is certain to require the aid of machines. The supporting processes behind RTP need to be just as fast as the payments themselves. In this regard, AI can trim down the resources -- and costs -- banks currently sustain to facilitate operations. Automation through AI can substantially increase the efficiency and speed needed for agile real-time payments.

The biggest barrier to adoption right now is the lack of proof points -- businesses are eager to see more specifics and use cases around the business applications of AI. While AI has gained popularity in consumer tech, its payments applications thus far are more limited, making some businesses hesitant to dive in. That said, many businesses believe that banks will lead the charge in AI adoption to improve payments efficiencies in the near term.

Regulations Begetting Prudence

Another friction point for AI adoption in banking and payments is the strict regulatory environment. Players in the payments ecosystem are eager to embrace AI technology but also need to practice caution in adopting untested methods. While other industries may outpace in AI adoption, the risk tolerance in banking and payments is much lower due to the regulatory environments in which they exist. Regulatory acceptance will continue to underpin the rate of adoption and expansion of scope with AI technology.

On the other hand, many emerging payments and banking technology and apps are employing AI from the start. These newer fintechs have the leg up on existing payments players that must affect change from legacy systems to newer technology, which can be a slow and laborious process. Established payments companies will need to increase agility and take some calculated risks in deploying AI and other technology to maintain pace with newer players.